The Royal Swedish Academy of Sciences have honoured the pair today for their work in contract theory.

But who is Oliver Hart and why has he become a laureate for this year’s prize?

What was the prize for?

Back in the mid-1980s, Hart and Holmströmmade contributions to a new branch of contract theory.

It may sound a bit confusing, but their work essentially highlighted how contracts can help people deal with conflicting interests – whether it be a CEO’s bonus, or the privatisation of public-sector activities.

Hart has also been hailed for his work in uncovering the declining quality of America’s private prisons, and his pioneering research into executive pay structures.

Tell me more about Hart

Oliver Hart was awarded for his work in contract theory (Picture: AP)

Hart now works as an economics professors at Harvard University in Massachusetts.

Physics Prize
The first half to David J. Thouless
And the other half, jointly to F. Duncan M. Haldane and J. Michael Kosterlitz
For theoretical discoveries of topological phase transitions and topological phases of matter.

Medicine Prize
Yoshinori Ohsumi
For his discoveries of mechanisms for autophagy.